Wed | Dec 11, 2019

Norris McDonald | Wars, coups, political threats …China’s BRI and Jamaica’s debts

Published:Sunday | November 24, 2019 | 12:27 AM

“Leadership means everything: pain, blood, and death!”

– Marcus Garvey

 

President Evo Morales’ socialist government of Bolivia has been overthrown by the military and apparently US-backed forces of the political opposition. Empress Jeanine Áñe, opposition leader, declared herself ‘president’.

Following this Bolivian right-wing coup de’etat, American president Donald ‘The Great’ Trump, warned that Venezuela and Nicaragua would be next.

Twenty-three people have been slaughtered by the US-backed brutal regime in Bolivia, and yet there has been no condemnation from Jamaica and the English-speaking Caribbean community.

Incredible!

POLITICAL RISK ANALYSIS

Let’s remember that the present crime wave that is causing so much inhumane pain and suffering has it roots, in my opinion – and as revealed by historical facts – in the Central Intelligence Agency (CIA) destabilisation campaign in the 1970s-1980s against the Michael Manley government.

Strategic raw materials are usually the driving force of America’s national-security and policy objectives.

Jamaica went to hell and back – well, the country is still there – because the foreign multinational corporations never wanted to pay Jamaica more for bauxite and alumina.

Now we come to the matter of Bolivia. It has the largest identified source of lithium and signed a US$2.3-billion contract with Xinjiang TBEA Group Co. Ltd, a Chinese company, and Germany’s K-UTEC AG Salt Technologies to develop these strategic resources.

Lithium is used to make batteries for electric cars.

Daniel Ramos of Reuters News Agency reported on, February 6, 2019, that China is “the biggest global consumer of lithium”, driven by a booming electrical car industry. According to Ramos, China is offering strong competition to the West.

Elon Musk recently set up a major electrical car factory in China. All this gives China a projected consumption of about 800,000 tonnes of lithium per year by 2025.

Could the America-China rivalry over lithium be one of the key reasons why Evo Morales was overthrown?

I think so … . What do you think?

POLITICAL THREATS

The America-China ‘greater power’ rivalry is negatively affecting the present course of the world’s historical evolution, hindering global economic growth.

America fulminates over Jamaica-China relations, warning Jamaicans to be careful of China, “a two-headed dragon”, but the 1983 Caribbean Basin Initiative was America’s last major economic support plan in this region.

Indeed, Donald ‘The Great’ Trump has reduced foreign aid to most poor nations, many of whom he has called “s**t-hole countries”.

Also, since 9/11, America has wasted U$6 trillion on senseless wars. Hence, it is misplaced priorities for American officials to fulminate about Jamaica’s political relations with China while wasting money on wars instead of investing in human development in poor countries.

Given the Bolivian coup and American warnings to Jamaica, is the Holness Government scared?

I can’t blame the Holness Government for being scared, if that’s the reality, but let’s face it, American policymakers have limited political options in Jamaica.

Why? I don’t believe that this government, or a future People’s National Party (PNP) government, would dump Jamaica’s China policy.

Then again, in a crazy world of political opportunism and trust deficiency, one cannot be too sure!

THE BRI INVESTMENT

Let’s now examine China’s Belt Road Initiative (BRI).

Now, Americans may be experts in obscuration – pretending to be victims of China’s “unfair trading practices” – yet facts reveal that tax dodging by the richest one per cent costs America US$5 trillion in taxes.

This is ‘dead money’ – uncollected cash – that would have helped augment America’s economic growth.

In contrast, China invested US$5 trillion into BRI projects, plugging the gap in global infrastructure needs, experts say.

The BRI is a global US$5-trillion infrastructure project in 99 countries initiated by China’s visionary president, Xi Jinping.

- The World Bank supports the BRI, pumping US$86.8 billion into 65 countries to help with road construction, bridges, port projects, etc.

- China has direct investment of US$522 billion in American, Canadian and European companies that profit from the BRI.

- Many American allies, including Israel, Saudi Arabia, and Turkey, among others, are involved in the BRI.

(Source: OECD Business and Finance Outlook , 2018).

POLITICAL ECONOMICS

Low-cost funds from China’s BRI, in my opinion, are the best alternative to getting financial resources to develop national infrastructure.

In fact, it pump-primes the Jamaican economy in a situation where the continued declining real value of the Jamaican dollar viz-à-viz the American dollar creates business uncertainty and adversely affects all social classes.

BRI investment in road and bridge construction helps all social classes because it creates increase spending, can influence more savings, and, overall, will have a positive effect on national economic growth.

Rising income and a dramatic rise in the real savings rate is a necessary condition to escape the International Monetary Fund’s (IMF) poverty-debt crisis.

Other complementary measures are needed, but that is outside the purview of my analysis.

In summary, China’s BRI positively creates what I would call ‘capital substitution’. In other words, given the inability to achieve a sustainable economic growth rate – under 40-odd years of draconian IMF restrictive policies – the underlying national savings rate has remained low, acting as a brake on Jamaica’s economic growth.

Therefore, foreign borrowing in practice, including under the BRI, has acted as a substitution for lack of investment funds not generated from national sources.

Finally, is Jamaica’s ‘rare earth’ find behind the bizarre American anti-China warning?

China is the main supplier of rare earth to America and, given the US-China trade wars, is threatening to halt deliveries.

Rare earth minerals are used in smartphones, computers, flatscreen TVs, and other high-end electronic devices.

Prime Minister Andrew Holness, in order to build trust, must:

- Clarify Jamaica’s general borrowing policy and not just speak about Chinese loans.

- Give a full update on foreign investments in gold, rare earth minerals, and offshore oil drillings; any major investment contracts signed; and the parties involved.

PM Holness suddenly saying that “Jamaica will no longer borrow more money from China” makes one wonder if he was pressured to say this.

That is the bitta truth!

- Norris McDonald is an economic journalist, social researcher, and political analyst. Email feedback to columns@gleanerjm.com and miaminorris@yahoo.com.